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The Pamphlet Collection of Sir Robert Stout: Volume 73

Friday, November 22

Friday, November 22.

The cross-examination of James B. Reid, representative for Nelson Bros., was continued.

Sir Robert Stout: Have you found out, Mr Reid, when Mr Ward's association came to act as agent for the Tyser line.

Witness: The last commission by the Mutual Company was February 1892.

When did the Ward Association do any work for the Tyser Company?—The Mutual Company were agents for the Tyser Company up to the time Mr Ward was appointed, and I can only get the information out of the Mutual Agency Company's books. I have the information now. Their connection ceased early in February.

Did the Ward Association or Mr Ward ever act as agents for Tyser before 1891?—They acted as agents from the time we gave up the position.

What do you mean by acted as agents? Did they do any work?—That is a question I cannot answer. I know that they were agents. If they did not do any work they should have done it.

page 70

In reply to further questions, witness said the usual commission for agents in the colony was 5 per cent. Mr Carswell's commission was divided.

Sir Robert Stout: In your letter of June you said to Mr Cuthbertson in a private letter to him: "I give this information for your own private use only." Then I suppose you don't mean to say up to that time you had disclosed the nature of the contract with Ward?

Witness: There was no desire to keep it secret.

Did you disclope it?—To whom?

Did you disclose the nature of your contract with Ward?—No; there was no object in doing so, but there was no secret about it.

Did you ever disclose it until this action was commenced?—We were never asked.

I suppose the contract of 1893 in reference to your purchase from Ward—you never disclosed that?—I don't think so.

Do you remember a special letter addressed to the farmers by Mr Ward?—No, I do not.

Do you know that it was denied that there bad been a sale?—I have seen a reference to it in the correspondence.

You remember Mr Ward's fetter of the 20th of April 1893, in which he says: "I have since been asked twice if it was true Nelsons had bought the works. I of course emphatically denied it, and said it was not true, as it may net suit Mr Nelson to have it known. Of course the sale does not date until January, and essentially it is quite true to deny any idle rumour of busy-bodies who want to know mere about other people's business than there is any necessity for"? You knew that the purchase of the works was denied by Mr Ward in 1893?—Yes, I knew it.

You did net take any steps to disabuse the public mind?—It was not my business.

Were not the prices gained by this concession better than the Southland prices?—Just so.

The words of the Southland contract are: "For prime crossbreds (wethers and maiden ewes), 2½d." What did you understand that to mean?—All sheep passed by the freezing companies as standard for price qualities.

What did that mean in weights? Do you mean to say that there were sheep under 50lb?—Oh, yes; we took sheep under 50lb.

Did you ever take any sheep from the Southland Company under 50lb except by special request?—We were not supposed to take any under weight, but we took any sheep of prime quality.

Was it not a fact that prime meant from 60lb to 80lb?—No.

What did it mean?—It meant any for which the company had a certificate.

If Mr Cuthbertson says that the range of weights was from 60lb to 80lb will you contradict him?—Yes.

When Mr Nelson told you "lay Ward alongside of the Southland Company," what was meant by that?—I understood it simply [unclear: me] to put both parties on equal terms.

Did it not mean that you were to allow [unclear: W] to get an advantage of the Southland [unclear: Company]?—It meant that the contracts were [unclear: to] as near as possible the same.

Then "laying alongside" meant that [unclear: W] complained that the fight was unequal?—[unclear: Y]

Then "laying alongside" meant giving [unclear: him] concession?—Yes; it was a [unclear: concession] course.

Mr Bell (to witness): You were asked [unclear: y] terday about the Tyser line. What did [unclear: y] say when you were asked by Sir Robert [unclear: St] as to the connection between Mr Nelson the Tyser line?

His Honor: I have the following [unclear: note] "I think Dobson consulted Nelson on [unclear: ma] things."

Witness stated that that was what be [unclear: said] Mr Bell (to witness): You are able [unclear: to] positively that Ward did not receive any [unclear: 2½ per] cent, from Nelson?—I am.

Did Nelson Bros, give Ward 2½ per [unclear: cent.] mission?—Mr Ward received no [unclear: commiss] whatever from Nelson Bros.

You were asking yesterday about [unclear: the] standing, which you understood existed [unclear: with] Ward, that he should be put upon [unclear: the] terms with the Southland Company? [unclear: You] asked to-day whether it was in the [unclear: contract] outside the contract, and I [unclear: understood] answer was: "There was such an [unclear: understanding,] and if it was not in the contract, [unclear: it] outside the contract?"—Yes.

You have seen the agreement since?—[unclear: Yes]

Mr Bell read the following clause [unclear: from] the agreement:—"In all other respects—save [unclear: to] mentioned in this agreement—the said [unclear: J.] Ward is to be placed on the same [unclear: footing] receive the same terms as the Southland [unclear: From] Meat and Export Company (Limited)."

Henry George Warren deposed: I [unclear: an] member of the managing staff of [unclear: Nelson] in New Zealand. I have been [unclear: through] accounts shewing the cost paid by theme [unclear: on] shipment per pound in New Zealand [unclear: to] Ward and to the Southland [unclear: Company.] statement produced is prepared by [unclear: myself] the New Zealand invoices.

Mr Bell said that the statement [unclear: showed] in the Star of England shipment [unclear: 933] were purchased from Mr Ward and [unclear: 6964] the Southland Company. The cost paid [unclear: to] Ward was 2.24d per lb, and the cost paid [unclear: to] Southland Company 2.44d. Then in the [unclear: Hawk] Bay shipment the cost paid to Mr Ward [unclear: was] 2.38d, and to the Southland Company [unclear: 2.46d] in the Maori King shipment the cost paid [unclear: to] Ward was 2.32d, and to the Southland [unclear: Company] 2.45d; in the Star of Victoria the cost [unclear: paid] Mr Ward was 2.31d, and to the [unclear: Southland] Company 2.46; and so forth, showing [unclear: that] page 71 Southland Company received more per pound in every case than Mr Ward received.

The question as to the returns showing the prices realised on each shipment to London was objected to by Sir Robert Stout, and disallowed witness, continued: I have looked at the account about the boilers. They were paid for by cheque from Mr Ward in June 1894. Mr Ward was allowed 12 months' credit, and was charged interest on any period over the 12 months.

By Sir R. Stout: I saw the cheque drawn out in Invercargill. That was at the time of the fixing up of the new company.

William Nelson deposed: I am colonial manager for the Nelson Bros. (Limited), who are a London company with freezing works in New Zealand at Tomoana (Gisborne), Waipukurau Woodville), and at the present moment at the Ocean Beach. At those works the company freeze mutton and beef. The company also purchase mutton frozen by other works. In 1892, 1893, and 1894 there were freezing works in New Zealand selling on their own account. The average total output of New Zealand per year for those three years was, roughly, two millions.

Sir R. Stout: In 1892 it was down to a million and a-half.

Witness continued: The last return will be something over two millions. My company has been annually taking about one-half of the total output—from three-quarters of a million to one million. With the exception of Waitara, which means Auckland, none of the freezing works in the colony shut down in 1892 or 1893. By "shut down" I mean "suspended operations for the whole year." The Waitara works are not open now. They have had two or three struggling attempts to open, and have opened and shut down again. I remember the agreement my company had with the Southland Company prior to 1891, and I remember the making of the contract of 1891.

Mr Bell: What was your object in cancelling the anterior contract and making a new contract ltd. advance in the beginning of 1891?

Witness: Primarily, of course, the object was to make money; but, beyond that, secondarily, to extend our contract for three years. We always found it more convenient to Extend our contracts when we had a little in land than to let the contracts run out. It was my desire to have the three years' contract at a price fixed. Everybody thought at the time that it was a good contract. There was very considerable competition at that time for the purchase of the output of works.

Before I go to 1892 I ask you with regard to the relations of the company to the Tyser line. What has the Nelson Company got to do with the Tyser line?—Our earliest connection with it was that Nelson Bros, were responsible for introducing the line to the colony. After the Tyser line was introduced into the colony we were morally bound to keep their boats filled. We had a contract with them to use our best endeavours to fill their boats. It is absolutely incorrect that we had control of their boats. Mr Dobson was manager of the Tyser line in New Zealand at its inception, and since his death Captain Todd has been the manager. I was a closely intimate friend of Mr Dobson, but I had absolutely no control, directly or indirectly, over Mr Dobson's actions in connection with the Tyser line. He was not a man to control. There was a sliding scale of freights charged by the Tyser line to us. The freight would be higher when the meat market is higher, lower when the market is lower. That was an arrangement we had as well with the Shaw, Savill, and Albion Company and the New Zealand Shipping Company. We also shipped by Turnbull, Martin, and Co.'s boats on the same terms. The sliding scale was the same in each case. My brother has been a director of the Tyser line. Whether he is so or not at the present time, I am not clear. There is no relationship between the two companies other that I have described. Nelson Bros, had no connection with the 2½ per cent, loading commission shared between Mr Reid and Mr Carswell. When Mr Ward stepped into Mr Reid's shoes and shared the commission with Mr Carswell, the Nelson Bros, had nothing to do with it. It was simply an accident that Mr Reid happened to be our agent and Mr Dobson's also.

On the 10th August 1892, an offer was made by Mr Reid to the Southland Company, in which Mr Reid offered the company 2½ per cent, if they would accept the grading contract. Was that made with your authority?—Yes, it was; by my instructions distinctly.

What is the 2½ per cent, in that letter of the 10th August?—The offer of that 2½ per cent, was a suggestion made by myself to Mr Reid as a probable satisfaction of a difficulty that Mr Cuthbertson was always complaining of. Mr Cuthbertson had it so firmly impressed on his mind that we were giving per cent, to Mr Ward that nothing we could say could make him believe otherwise, and it occurred to me that if we could satisfy Mr Cuthbertson by some simple means it would be a great object to attain; and I told Mr Reid that if the Southland Company would consent to grade their meat, which thing we had often been trying to get them to do, we would pay Mr Cuthbertson 2½ per cent, on the freight, not by any means as having anything to do with the freight question, but because per cent, on the freight represented a figure which I was prepared to pay for having my sheep graded. That was refused. I never had any complaint after that from the Southland Company. There was not much room for it.

You heard of Mr Ward's proposed erection of opposition works in June 1891?—Yes. Day by page 72 day as events developed we simply stood alongside the Southland Company, and met every event as it occurred. We and the Southland Company were simply one and the same thing at that time. We met every incident in connection with the rumoured erection of Mr Ward's works to the best of ability in order to checkmate Mr Ward, and to prevent the erection of works in opposition to the Southland Company. The history of the Mataura site is that the Southland Company first of all contemplated taking it, but they held off and did not take it. I felt so certain that the Mataura site would be the site upon which opposition works, if any, would be erected that I myself got the site under offer for a month; and we parted with the site to the Southland Company. We were very confident at that time that we could keep Mr Ward out of building.

On August 18 you wrote to Mr Reid that you were satisfied Mr Ward meant to build?—Yes. That was the result of a conversation I had had with Mr Ward. I did not in any way join Ward in the erection of works.

Sir R. Stout: I am not suggesting that any money was put by Mr Nelson in the works before the agreement of 1893.

Witness continued: Before January 1, 1894, I had no financial interest of any kind in Mr Ward's works. When the negotiations between the Southland Company and Mr Ward fell through, until I received Mr Dobson's letter in September 1891 inquiring whether I would buy Mr Ward's output on the same terms as those on which I was buying from the Southland Company, I had no negotiations with Mr Ward. Mr Dobson was interested in obtaining the output from Mr Ward as well as from the Southland Company in order to maintain the Bluff as a Tyser port. Our agreement with the Southland Company in 1891 had ousted other shipping companies, and made the Bluff a Tyser port so far as frozen meat was concerned. In the Southland Company's contract there was a guarantee that we should supply them with 40.000 sheep at least. There was no guarantee in the contract with Mr Ward. The Southland Company looked on that guarantee as of such advantage that they declined to give the contract without it. At the then size of their works 40,000 sheep would have been a fair and reasonable year's work. The freezing works are not open for 52 weeks in the year. We certainly did not attempt to give Mr Ward any undue advantage over the Southland Company at any time, and as a matter of fact the output contract made with Mr Ward was not advantageous to him. At first the contract was nothing like so good as the Southland's contract. It took us some time to discover that, but when we did discover it, we had to make concessions in order to treat Mr Ward equal. After the concessions Mr Ward's contract were not quite as good, but [unclear: we] made it is nearly equal as possible. [unclear: That] what was meant by keeping him [unclear: alongside] Southland Company; that if possible [unclear: ne] should have the advantage. It was [unclear: by] instructions the offer was made to the [unclear: Southland] Company if they would grade to [unclear: co] to them 2½ per cent. It was in my [unclear: min] keep strictly to the contract with the [unclear: Southland] Company's people, and as a matter [unclear: of] according to my understanding of the [unclear: con] I did so.

Mr Bell: Did you understand the [unclear: agree] of June 1891 prohibited you from [unclear: entering] an output agreement?

Sir R. Stout objected to the question. [unclear: I] not for the witness to interpret the [unclear: contract]

Mr Bell said he asked the [unclear: question] ground that the contract was capable [unclear: of] interpretations—Pollock on Contracts (6th, [unclear: tion], 433). (To witness:) Did you [unclear: understand] the agreement of June 1891 [unclear: prohibited] from entering into an output [unclear: agreement] Mr Ward?—Certainly not.

Did you read the seventh and eighth [unclear: cle] of the contract?—I did.

What on your part did you [unclear: understand] seventh clause to give you power to do?

His Honor: Better put it in the [unclear: form] you understand?

Sir R. Stout: I object to this also.

His Honor: Yes, but not on the [unclear: ground] its being put in a leading form.

Sir R. Stout: No.

Mr Bell: Did you understand the [unclear: se] clause as permitting you to enter into an [unclear: o] agreement in any part of New Zealand, [unclear: ining] the counties of Southland and [unclear: Wallacs] Yes, so long as the terms were not [unclear: super] those allowed to the Southland Company.

Then, did you understand that the [unclear: out] agreement was erecting, or assisting [unclear: in] erection or use of freezing works?—No; [unclear: tainly] I did not.

Did you at any time until the [unclear: present] hear from the Southland Company or [unclear: from] person connected with the Southland Company that the Southland [unclear: Company] strued the contract in a different [unclear: sec] that which you have just stated as your [unclear: understanding]?—No, not a word.

Did you act upon that interpretation [unclear: whi] you have just stated as yours?—I did.

Have you read the letters from the [unclear: Southland] Company?

Sir R. Stout: I object to the [unclear: witness] allowed to interpret the letters.

His Honor: I do not understand Mr [unclear: Bel] ask that.

Mr Bell: You have read the [unclear: letters] mencing with the letter of 5th of [unclear: May-] Cuthbertson to Mr Reid—including the [unclear: th] letters of 15th of August?—Yes.

Did you receive any communication [unclear: from] Southland Company at any time until this [unclear: year] page 73 [unclear: in] any sense differing from what is conveyed by [unclear: those] letters?

Sir R. Stout: What is meant by that? Does [unclear: it] mean that no complaints have been made [unclear: against] the output contract?

Mr. Bell: Yes.

Sir R. Stout: We admit that he did not.

Mr Bell: I wish to have it in the notes. Did you at any time receive any communication [unclear: from] the Southland Company conveying an [unclear: interpretation] of the contract of June 1891 [unclear: inconsistent] with that conveyed in the [unclear: correspondence] just referred to?

Sir R. Stout: Did he receive any [unclear: communication] at all? You cannot put that question; [unclear: it] is asking the contents of written documents.

Mr Bell: The question is, your Honor, whether the parties hare consistently acted upon a [unclear: particular] interpretation. The particular interpretation having now been put before the witness, it is a necessary consequence he should prove there has been nothing inconsistent on the part of either party from that, and to show that is the object of the questions.

His Honor: Can you get at what was or was not in written communications he received unless you produce them? It is fair to assume at present that if the company had made communications in which they had raised any objections to this output contract we should have had them before us. The inference is there is not.

Mr. Bell: You ask the witness are there any other documents. If he says "Yes," the documents must be produced or the answer is not evidence; if he says "No," that is given as evidence—it is evidence of fact.

His Honor: I understand there are written documents.

Mr Bell: There are, but no other written documents relating to this matter,

Sir R. Stout: He has already said the only letters conveying complaints are the letters produced.

Mr Bell: The complaints practically end with the letters of the 15th August, because, as the witness says, they then offered all they asked and there was no further fuss.

Sir R. Stout admitted there were no documents relating to the matter except those produced.

Mr Bell: Then I will confine my questions to communications other than by written documents

Sir R. Stout: There is a point there as to whether the company could verbally communicate or vary documents under seal.

Mr Bell said the question he put was a general one of exclusion, not a question of inclusion. (To witness:) Did you receive any communication from anybody indicating a view inconsistent with what you have stated to the court?-No.

Mr Bell: Your Honor has noted that the form of the question is not objected to, but the object of it?

Witness continued: We bought sheep f.o.b, and had nothing whatever to do with the works; they might have been frozen anywhere. We buy sheep f.o.b. from many other works, and we have no control over the works. I remember the letter of January 29, 1892 [read] from Reid, to Ward, in which the words occur, "The offer is beyond present market, but we are anxious to work with you." In making a contract it is of little importance what the price is at the moment. The price we gave for a two years' contract has little to do with the price in the London market at the moment. As a matter of fact prices did rise in the London market after January 1892. It is to our previous experience we look to form a judgment. The object of the contract was to make money; but the double object in this case was this: If we had not made that contract with Ward I looked upon it that we should have been absolutely deserting our friends. At the time I looked upon that as the last thing open to me to protect the interests of the Southland Company. It is so apparent to anyone who knows anything at all of the meat trade that the Southland Company were absolutely bound to us, whatever the price of me it was—whether high or low, they had to give their meat at a price. At that time, as I have explained, there was considerable excitement in the trade tor various reasons. The popular belief right throughout the country was that we had a very good time before us. I undoubtedly joined in that belief. I thought we had a very good contract, and Mr Reid's letters that have been read are still further proof of what he thought individually. I am perfectly clear in my own mind that had we not bought Mr Ward's output, using the wisdom we did in the matter, somebody else would have done it, and I am satisfied they would have given him more money than we did. The shipping companies were anxious to cut in. It is a simple thing in the light of past events to say what happened, but charts such as Weddel's could not be prepared until after the events. There was excitement in the trade at time which was not justified by subsequent events.

Mr Bell: If your anticipations of 1891 had been realised and no output contract had been made with Mr Ward, what must necessarily have been the result? You say somebody else would have given the contract. Assuming that had been so, what would have been the result?—Witness: The result would have been that Mr Ward must necessarily have taken all the sheep in Southland except the 40,000. They would have got that under our contract; but they would have got no more unless they were prepared to do as they did in 1894 and 1895, lose money.

page 74

Sir R. Stout: They have not lost in 1895. You are quite wrong. We have Dot lost up to this.

Mr Bell: Probably the £30,000 claimed is taken into consideration. (To witness:) You say that if you had rot entered into the output contract, somebody else would have done so?—Witness: I was perfectly clear about it at the time.

Had it anything to do with the violent competition which then arose between Mr Ward and the Southland Company?—Nothing at all.

Examination continued: There was competition between them, but I do not think it was exceptional. I took shares in the Southland Company. I took them at the time of the erection of the Southland works. At the time I was supposed to have £1500 worth of shares fully paid up I had no other shares at any time in the company. It has been suggested that Ward bought inferior sheep. On one occasion I made strong complaints to Mr Reid. When I took over the shares we purposely did not change the brand. The question of changing the brand was discussed, but the brand had made such a good name for itself that we could not afford to do it. I know that from the account sales.

Sir R. Stout objected to this as not being evidence.

Witness: Naturally we should have put on our own brand, but the brand had made such a good name for itself that we did not change the brand. The Ward brand meat produced more money in London, and we could not afford to change the brand. I heard Mr Clulee's evidence. Mr Clulee is not a large exporter, but distinctly a small one. Mr Clulee said there was no competition in 1893. I do not agree with that. Having regard to Weddel's chart for 1893, I adhere to the opinion I have expressed. There would have been competition. In my opinion the shipping companies which came in in 1893 would have come in at any time before if they could have got in.

Cross-examined by Sir Robert Stout: The Tyser line has only two steamers. I don't know that my brother was one of the largest shareholders in the Tyser line. I believe Nelson Bros. (Limited) are shareholders in that line. We supplied the meat for the line. It was quite likely that Mr Dobson consulted the firm about the appointment of Mr Ward as agent at the Bluff.

Sir Robert Stout said in a letter written by witness he said: "We have got a Cabinet Minister to ourselves. That is a feature not to be despised, I can tell you, in these days."

Witness: No one would deny that.

What would be the business advantage to you?—I call that the method of a wise man.

Has anything resulted from it?—Apparently a good deal.

Did you not consider that a Cabinet Minister would be of advantage to you. That is what you mean by this letter?—I should say [unclear: Ni] that. I will leave it to his Honor to [unclear: image] what I meant by that. I cannot define it.

Did you consider yourself bound to [unclear: vary] contract that you made for purchasing on [unclear: be] of the purchaser?—Certainly, under [unclear: certi] conditions.

For what purpose?—Simply on the [unclear: grou] of common justice.

In justice? Is not the motto of all [unclear: commercial] men to buy in the cheapest [unclear: market] sell in the dearest?—It is a motto of all [unclear: busin] men to look to the future, and it is my [unclear: mo] to run my business with the view of [unclear: making] gain in the future.

In reply to further questions witness [unclear: said] made the contract under the belief [unclear: that] price of meat would go up. It was a fact [unclear: the] South Island mutton was far better than [unclear: Na] Island mutton. Nelson Bros, were not [unclear: particularly] anxious to get works under their [unclear: con] in the South Island. They were [unclear: anxious] get South Island mutton.

Sir Robert Stout: When you took the [unclear: she] Mataura, was it not with the ultimate [unclear: inten] of building works there in order to get [unclear: cont] of Southland?—I am not going to say [unclear: th] because it was not so. I got possession [unclear: of] Mataura site because I felt perfectly [unclear: certi] that some opponent of the Southland [unclear: Company] would have taken up that site if I [unclear: had] taken it up.

In your letter, when you say something [unclear: about] laying Ward alongside of the company, you [unclear: al] say you cannot let Ward go to the [unclear: wa] You were doing that from a purely [unclear: business] point of view, were you? You considered [unclear: it] your interest that Ward should not go to [unclear: the] wall?—I looked upon it to my interest to [unclear: tre] him exactly the same as the Southland [unclear: Company.]

Are you aware what the average [unclear: weight] the sheep was that Mr Ward sent in?—[unclear: No;] am not.

Are you aware that your firm took a [unclear: greater] number of light-weight sheep from Mr [unclear: Wa] than from the Southland Company?—From [unclear: the] correspondence, they apparently did.

You agreed to purchase the Ocean [unclear: Bea] Works in 1893?—Yes.

Did you consider at that time that you [unclear: had] right to purchase them, or did you—[unclear: not?—] clearly thought I bad a right to make [unclear: arrangements] for the purchase of these works, so [unclear: lo] as I did not commit myself to the [unclear: purchase] use of the works till January 1894.

You never asked the Southland [unclear: Company] consent to your making that [unclear: purchase?-] did not reed to let it be known on the [unclear: house] tops.

Did you not, in 1893, really look [unclear: upon] Mr. Ward as your partner in the Ocean [unclear: Beach] Works?—Witness laughed at this question, [unclear: and] replied in the negative.

page 75

You agreed with Mr Ward that he was to [unclear: make] additions at the Ocean Beach Works?—No; that is not so.

Were you buying any goodwill with the Ocean [unclear: Beach] Works?—Mr Ward knows that better [unclear: than] I do. I don't know how much of this is [unclear: goodwill.]

In reply to another question witness said the [unclear: words] of the contract for the purchase of the [unclear: works] were that the works were to be finished [unclear: before] the firm took them over in January 1894. Mr Bell: I had proposed, your Honor, to call [unclear: Mr] Ward, to put him in the box and tender him [unclear: for] cross-examination. There are only one [unclear: or] questions Mr Ward could have answered [unclear: which] I could successfully make relevant to my [unclear: se]. It may be proper, though, that Mr Ward [unclear: would] have a right to answer the kind of [unclear: suggestion] that has been made against him.

Sir R. Stout said that he had made no [unclear: suggestion] against Mr Ward. He had strictly [unclear: paid] that they bad nothing to [unclear: do] with Mr Ward,

His Honor: Then, if that is the case, there [unclear: is] no need to call Mr Ward.

Mr. Bell: Mr Ward is emphatically anxious to [unclear: go] into the box, and I [unclear: am] equally clear that I have no question to ask him which is relevant to the issue, and I wish to do nothing to delay the court.

Sir R. Stout: I have no questions to ask Mr [unclear: Ward], and I shall not comment on his not being [unclear: allowed]

Mr Bell: I have no association with Mr [unclear: Ward]. He is not now in any way associated [unclear: with] the Ocean Beach Works. There is no [unclear: secection] between Mr Ward and my clients, [unclear: but] still Mr Ward is anxious to go into the box.

His Honor: Mr Ward might go into the box [unclear: it he] wishes to make some explanation.

Sir R. Stout: I object to that. I don't [unclear: are] why Mr Ward should intervene in the case.

His Honor: What can possibly be suggested [unclear: from] the evidence that Mr Ward has done which [unclear: he] cught not to have done. Supposing the [unclear: Nelsons] were wrong in taking his output, what in that [unclear: to] Mr Ward? Supposing they committed [unclear: a breach] of the contract Mr Ward was not a [unclear: party] to the contract.

Sir R. Stout asked leave to put a question to [unclear: Mr] Reid.

James B. Reid, recalled, said he was aware [unclear: the] southland Company did not keep to [unclear: might]. He always rejected excessively fat [unclear: sleep].

Mr. Bell nut in three bundles of documents, [unclear: all of] which had been referred to. A fourth [unclear: handle] had been made up, containing some [unclear: documents] which bad been already read and [unclear: some] which bad been objected to. He proposed in call for the letters which bed been written by Mr Cuningham Smith, general manager of [unclear: the] company, to the shipping company, and [unclear: from] the shipping company to Mr Cuningham Smith immediately prior to the commencement of the action. He submitted that these should be admitted on exactly the same principle on which the demand from the bank and the minutes had been admitted.

The file of documents was handed up to his Honor for perusal, and while they were being perused

William Cuningham Smith, called under subpœna, was put in the witness box, but not sworn.

Mr Bell read the subpœna to witness to produce his letter book containing copies of letters written by him to Mr Gibbs, manager of the New Zealand Shipping Company, and to Mr Moore, of Messrs Turnbull, Martin, and Co., regarding the subject matter of the action, and asked whether he produced these letters.

Witness: I have brought my private letter book which contains letters to Martin, but I claim that I cannot produce it, because I think if it were produced I should be liable to libel;

Mr Bell: We have nothing to do with that.

Sir R. Stout: He declines to produce.

Mr Bell: Then I call for your Honor to deal with the witness?

His Honor: Why are they rot produced?

Sir R. Stout: He says they might render him liable to libel if they are produced.

Mr Bell: That is not an answer,

His Honor: If they are evidence they ought to be produced, I think.

Sir Robert Stout submitted that the private correspondence of Mr Smith or any other individual could not be evidence against the company, and was not evidence because the letters were not original. He objected to copies.

His Honor observed that the witness was asked to produce his letter book in which were copies of letters from him to Mr Martin and to Mr Gibbs.

Mr Bell said the witness was required also to produce letters written by Mr Martin and by Mr Gibbs to him relating in any way to the subject matter of the action.

Sir R. Stout: All official letters have been disclosed on the affidavit and sworn to.

Mr Bell: I might ask your Honor if it would be right for the court to ask if any documents have been destroyed since the writ. I submit to the court that if documents are not produced it ought to be asked if there is any ground for the suggestion that they have been destroyed.

Witness: Most decidedly not; not the slightest.

His Honor: There is a difficulty about the letter book surely, Mr Bell? The letter book contains copies of the letters he has written. Must you not produce the originals? Must you not subpœna the persons with the originals?

Mr Bell said be wanted the documents possibly to examine this witness and possibly page 76 the examination of other witnesses. The documents were not produced on the affidavit of discovery, and the only way to get them was to subpœna the witness. He (Mr Bell) submitted that he was entitled to see the letter book. Supposing the document was a document the witness was bound to produce on the discovery, it contained a copy of an entry written by this witness relating to the subject matter of the action.

Sir R. Stout: He has not the documents in court.

Mr Bell: He is bound to.

Sir R Stout: Not if it prejudices him.

His Honor: There may be good excuse for not producing the documents, but they should be in court. Are they in court?

Witness: No; but they are close to the court.

Mr Bell, to save time, did not press for the production of the correspondence, but tendered the documents which were under the consideration of his Honor, as showing the motive of the action and the ground of loss the company had intended to allege.

Sir R. Stout objected to these letters being put in, as they dealt with counsel's opinion.

After some discussion it was agreed between the parties that an extract from a letter from the Southland Company to the Shipping Company of April 26, 1895, should be put in, and that the other letters should not be put in.

Amendments of both the statement of claim and statement of defence were made, leave being reserved in each case to object.

Mr Bell: Now, your Honor, I ask for a direction that only three breaches have been supported by evidence—(a) the making of the oat-put agreement in 1892, (b) the agreement of sale in 1893, and (c) the loan of £20.000 to Mr Ward in November 1893. Then I say as to (a) that it is not a breach of the eighth clause of the agreement of 1891, it is not a breach laid in the statement of claim, it is a contract expressly authorised by the agreement of June 1891, and that both parties adopted as the construction of the contract, and acted upon such construction, that the output agreement was not a breach of the eighth clause. If it was a breach, it was (a) expressly waived by the plaintiffs; (b) the plaintiffs elected to treat it as not a breach of the eighth clause, but as authorised by the seventh clause, and on that election claimed from the defendants rights which they could not claim on that basis; (c) the plaintiffs expressly acquiesced in the output agreement, and (d) the plaintiffs arranged with the defendants to accept, as for the mutual advantage of both parties, the output agreement. Coming back to head (b), the agreement for the sale in 1893 is not a breach of the eighth clause, inasmuch as it is expressly provided that it does not take effect until the 1st January 1894, and it is not a breach in any case. As to damages, I ask for a direction that the sum lost by the plaintiffs is not the measure of [unclear: dama] caused by the breach since their own [unclear: action] attempting to defeat Mr Ward and the [unclear: excessive] prices paid by them were the result of the [unclear: policy], and such loss is not damages [unclear: flowing] from the breach, that the extra [unclear: expenditure] works and plant incurred by the [unclear: plaintiffs] not a consequence of any breach but [unclear: an a] that results from their attempt to [unclear: defeat Mr] Ward, and that the loss (if any) of the [unclear: plaint] company followed from either the [unclear: erection] the works or the making of the output [unclear: agreement]. In regard to the first cause, we [unclear: had] part in that, and with regard to the [unclear: second] cause, they are barred by acquiescence [unclear: from] claiming.

Sir R. Stout: The only direction I [unclear: ask] that on the pleadings there is no [unclear: proof] acquiescence. As to damages I submit [unclear: that] direction that should go to the jury is [unclear: th] they should give damages not for the [unclear: eraction] of the works, but for Nelson's breach. [unclear: The] put contract necessarily led to damage [unclear: to] and if so the jury must take into [unclear: consideration] the circumstance whether there was a [unclear: liked] hood of any persons stepping in to give a [unclear: fi] contract for two years. If not, it is [unclear: perfac] clear from the evidence that Ward [unclear: could] carry on, and we could not have had the competition or loss. That is the evidence.

Mr Bell: It is all the other way.

Sir R. Stout: Then, I think a [unclear: separ] branch of damage should be put to the [unclear: ja] and a separate assessment made on the [unclear: ground] that, assuming there was no output [unclear: contract] all, the contract, made in April 1893, Ward a firm contract on which he could [unclear: fina] and be enabled to carry on his [unclear: works-] but for that he would not have carried [unclear: on-a] gave him an enormous advantage to [unclear: carry] the contract.

His Honor: I do not think I can [unclear: direct] jury as Mr Bell asks me to. If the [unclear: entering] to the output contract was a breach, [unclear: then] moment the contract was executed the [unclear: bre] had been committed. The subsequent [unclear: action] the parties, I think, would be relevant to [unclear: th] question of damage. It might be [unclear: very] contended that this right being infringed [unclear: an] claim made to stop its infringement, [unclear: they] really not suffering any damage by the [unclear: infriment]. If the entering into che output contract was a breach, then that contract was [unclear: made] with out the knowledge of the plaintiffs, and the [unclear: bre] having been committed it is difficult to [unclear: see] that any subsequent act of theirs can amount [unclear: to] acquiesence in the breach. I shall [unclear: direct] jury as I have already [unclear: indicated.] shall also further direct the [unclear: jury] the purposes of the present [unclear: case—] course, as I said before, the direction [unclear: is] in order to prevent the necessity of the [unclear: just] being summoned again than that I am [unclear: absolute's] satisfied the direction is a correct [unclear: one-I] shall direct that entering into the output [unclear: contract] page 77 was a breach, and that entering into the agreement of 1893 was a breach, and that these are the only two breaches—there are no other. Then the question the jury will have to determine is what damages have been proved to flow from these breaches. I do not think I can give any very distinct direction as to damages. I think Sir Robert Stout's suggestion that there should be two heads of damage is a perfectly reasonable one, and that it will satisfy both parties that it should be put in that way. The jury have to be satisfied that the plaintiff company have suffered damage from the defendants entering into the output contract, and entering into the other contract, and they would have to ascertain the amount of such damage. They would have to find that entering into the output contract or the other contract was the cause of any damage. They would find, of course, the loses the company sustained during those two years is not necessarily a measure of damage. I shall have practically to direct the jury, as I have said, and in the way I have already indicated when the motion for the non-suit was made. But it may be as well that this question should be reserved for the decision of the court afterwards.

Mr Bell: I understand your Honor rules against me, and gives leave to move?

His Honor: Yes.

Mr Hosking, addressing the jury on behalf of the defendant company, said be was quite conscious the patience of the jury had already been severely taxed in this case, and he did not propose to detain them at any great length in order to deal with the remaining part of it that fell to him. The discussion that had taken place upon abstruse legal points during the past hour or so had perhaps withdrawn from their minds the appearance which the last witness on the defendant side, Mr Nelson, bad presented in the box, and the evidence which he had given. Now the evidence Mr Nelson had given with regard to frozen meat contracts in general throughout the colony, with regard to prices and the ups and downs of trade, and the evidence he had given with regard to his own methods of conducting business, was before them. And he though however much his learned friend Sir Robert Stout might have suggested those methods were not within the four corners of the agreement, they were certainly such methods as must commend themselves to the jurors, as just and fair-minded men of business. He thought, with all submission, that Mr Nelson's evidence, as given by him in the box, did away to a large extent with the necessity for his elaborating on the case in summing up. When that witness gave his evidence, both in answer to his learned friend Mr Bell and his learned friend Sir Robert Stout, be gave them a very fair summary of the position and of his attitude throughout the whole of this case. He (the learned counsel) proposed to leave the correspondence, which had been gone over and over again, before them. He was not going to weary them by re-reading it, but would leave it before them, and when they got away from the interpretation which counsel for the defence contended should be placed on a particular passage, or which counsel for the plaintiff maintained it should bear, they would be able, under the direction of bis Honor, to place their own interpretations on those letters. With regard to the correspondence, they should, however, bear in mind, as his learned friend had said in opening the case on behalf of the defendants, that these letters were largely private correspondence; naturally a class of correspondence in which the writer would lay bare his inmost thoughts. It, too, was a class of correspondence which did not bear the impress of the correspondence of Mr Cuningham Smith, who declined to produce his letters, because he was afraid if he produced them actions for libel would follow. The defendants had produced every letter from the beginning of the transaction to the end that they had been called upon to produce; and there was not one of them of which they had to say "we fear to produce it because we have in it traduced some other people." He merely wished to lay emphasis upon the fact of the fair and honourable character of that correspondence written offhand, as it were, and not with the preciseness of ordinary business letters. He called attention to this only for the purpose of showing the class of man who had been dealing as the head of the defendant company with the Southland Company. This was an important fact to bear in mind, because, although it would probably be ruled that intention had nothing to do with the question of damage flowing from a breach of contract, it should be borne in mind by them when they came to consider whether some particular act was such a breach that it should involve the payment of damages by the defendant company. In order that he might come a little closer to the consideration of the points before them, he might say that the directions which his Honor had given on the question of acquiescence and so on would relieve him from dealing with that part of the subject, and would he hoped shorten his remarks. In anticipation that he might have to address them upon those points, he had arranged his ideas accordingly, and it might be that his observations would not now be presented in the same consecutive order as otherwise. The first point he wished to bring before them was: What was the nature of the case that the defendants were originally called upon to appear to? The declaration presented in the action alleged that they had entered into a contract not to erect, or to assist, or be concerned in the erection, or use of freezing works, and upon that interrogatories had been administered by the plaintiffs. Now, these page 78 interrogatories bore out by their character the nature of the case the plaintiffs intended to present. They had heard them read, and from the minutes which had been presented they would see that Mr Smith said that he had very good information for saying that Nelsons were interested in the Ocean Beach Works in 1891, 1892, and 1893. Now, Mr Smith, the gentleman, who was able to give all this information as to how the defendants were interested, and who might be called the source and origin of this litigation, had not been put in the box in order to give them the benefit of that information.

Sir R. Stout: He was put in the box.

Mr Hosking said Mr Smith had not been put in the box and examined as a witness, but had been simply called to produce certain documents. He could not give them any evidence respecting the good information referred to: he could not even produce a single bit of evidence for them. His information had been embodied in letters, which he said would submit him to a criminal prosecution if he produced them. Such had been the beginning of these proceedings. What was it the proceedings were founded upon at the outset of the action? What had the £100 voted by the directors of the plaintiff company been voted to do? It was suggested in the interrogatories that the interest of Nelson Bros, in the Ocean Beach Works could be proved from Nelsons' own balance sheets, which represented during the years 1891, 1892, and 1893 a growing increase in their investments. Those investments were not detailed, and they were asked therefore the nature of the investments. Then when the answers to the interrogatories came, they heard no more about that part of the case, and they had heard not a single syllable of it during the course of the proceedings in that court. Then what was the nature of the case which his learned friend came into the court with? If he had noted rightly what his learned friend had said, he had said, "We do not rely upon the output agreement at all."

Sir Robert Stout: I never said so.

Mr Hosking said his learned friend had said

We only look on it as a step in the breach. What we go on is the whole of what they have been doing—as an indication that they were interested." Then when his learned friend Mr Bell had put it to Sir Robert Stout, he said "We do not need to rely on the outward agreement, because we have got the purchase in April 1893." Now it was not until the ruling of his Honor that it occurred to his learned friend that he had a case at all.

Sir R. Stout: Nothing of the sort; that is absolutely incorrect.

Mr Hosking: Then why did his learned friend not rely upon the output agreement at the start, instead of their coming round after the ruling and then saying it was the output agreement that had caused the [unclear: damage] fact was his learned friend, like Mr [unclear: Ceson] and everybody else, thought that [unclear: it] the output agreement that was [unclear: the] fringement of the contract, and [unclear: that] not the output agreement that had [unclear: cause] damage, and that was consistent [unclear: wi] conduct of the parties throughout. [unclear: Ja] word more in reference to these [unclear: procee] because the character of the [unclear: proceeding] to be borne in mind in determining [unclear: wh] they were going to punish the [unclear: defenda] fixing upon them anything in the [unclear: sh] damages. He remembered the story [unclear: of] who, when heavily indebted to a [unclear: person] amount he could not pay, had the [unclear: very] fortune to be bitten by a neighbour's [unclear: dag] idea had instantly seized him that [unclear: no] the chance for settling with his [unclear: creditors,] so he rushed off to him and sold [unclear: his] of action to damages for a [unclear: dog] and so put his creditors square. [unclear: Now] had they here? They had a very [unclear: fierce] demand from the Bank of New [unclear: Zealand] up the amount of the plaintiff [unclear: company's] draft. Then Mr Cuningham Smith [unclear: ca] meeting on the 2nd April, and [unclear: they] minutes lying side by side, very [unclear: neatl] quietly reposing there till [unclear: unearthed] order for inspection. There was the [unclear: de] of the Bank of New Zealand, and [unclear: them] Smith discovered that the company [unclear: had] bite that it could sell, and he [unclear: immediately] we have £30,000 in this bite of ours [unclear: aud] we will be able to square the bank. Mr [unclear: S] valuable information, which had [unclear: appa] disappeared in thin air since, was [unclear: wh] induced the directors there and then [unclear: to] £100 to be spent on exploiting this [unclear: clain] the dog bite. That was one of the [unclear: ele] of the case which they must bear [unclear: in] regarding this action. What was it the [unclear: di] themselves considered was the [unclear: ground] gave them a right of action? Was [unclear: it] they then found for the first time [unclear: t] Nelson had entered into the output [unclear: agree] There was not a word of that in their [unclear: res] No; it was because Mr Smith [unclear: said] his information gave him very [unclear: good] for supposing that during the years 1891, and 1893 Nelson Bros. [unclear: (Limited)] interest in the Ocean Beach Works, [unclear: and] immediately the action was [unclear: commenced] what was the nature of the [unclear: charge] against Mr Nelson, for one must [unclear: assor] action of Nelson Bros (Limited) [unclear: with] hearing the name? What was the [unclear: nat] the action brought against Mr [unclear: Nelson] was an action brought against [unclear: Mr] charging him with the most [unclear: dishonourable] duct of which he could possibly [unclear: have] guilty—viz., that at the very [unclear: time] be entering into the contract with the [unclear: Southland] Company for the purchase of their [unclear: output] was erecting in the direct [unclear: teeth of] page 79 covenant he had entered into with them, and which he was suggesting he was carrying out-he was erecting or interested in the erection of the Ocean Beach Works for the purpose of running the Southland Company. That was the suggestion made against Mr Nelson, that he had been acting most dishonestly over a period of three years in union with Mr Ward in something which if it could be proved Could be very much like a criminal conspiracy. Mr Nelson had this charge made against him, and it was published and rent forth to the world. He supposed the newspapers in Southland had nob much to do, for rumours had been constantly coming from Southland as to what was going to hapten in this case. Mr Nelson now came before them as much as anything for the purpose of setting his reputation right with the mercantile world. Mr Nelson was a man whose business resources were dependent upon the nature of the contracts he was able to make from time to time, and the good faith with which he carried them out. Was he to have a stain like this resting upon him? The Southland Company had brought this action against him charging him with double dealing, and he must allow the case to go on whatever might be the consequences of having the matter thoroughly threshed out in a court of law. Mr Nelson had come there to meet that case, which had been common ground to both sides until the action had taken the turn it did on his Honor's ruling. Until then the output agreement was not thought of as a breach of contract that could be charged against Nelson Bros. (Limited). Now, he submitted that the action had to be looked at from that point of view, if they were to find something in the shape of damages against the defendant beyond the smallest of coins. By the extent to which the damages exceeded the limit he had suggested they would brand Mr Nelson's conduct with the aspect of double dealing with the plaintiff company. He asked them if Mr Nelson, judging from his conduct in the box, was the class of man who ought to be punished in any court of law with damages because of some technical breach which had been discovered for the first time against him when he was defending his character. He would now dismiss these more general considerations and come to deal with the question of what under the worst aspect of the case was the amount of damage they would assess for the breach of his contract. He would ask them to remember that the plaintiffs themselves had been the judges of what they had suffered from the breach, and in order that he might come to the question of the output agreement and deal with that, he would take the other matter first which his Honor had announced he should rule to be a breach of contract—the purchase of the works in April 1893. His learned friend, in opening, had suggested that the would be able to make the principal part of his case hang upon this contract for purchase in 1893. It was now found that a technical breach was committed at the time of the contract for the sale Mr Ward was running the works, he was left in possession of the works, and the contract of sale gave the defendants no right whatever to interfere in any way whatever with the control of the works. If any damage did happen from the mere acceptance of that offer seeing that nothing whatever was done to alter the position as between Nelson Bros, and Mr Ward after that date until the end of the term, it could not be said that any damages of a substantial nature had followed from the purchase of the works in 1893. All the damage that had been complained of—all the damage that had been led to them in the evidence—had been brought about before the purchase of the works in 1893. Mr Cuthbertson had said that the damage was due to the defective clearing of their works, the acceptance of inferior sheep from Mr Ward, and the non-concession of the 2½ per cent, on freight. Now, these were matters which were the subject of complaint during 1892. There was no pretence that after April 1893 there were more complaints from the Southland Company. They were still struggling to get the per cent, commission, but there was no complaint as to clearing their works or of the inferiority of the sheep accepted from Mr Ward. It was, indeed, during that time that Mr Ward's brand acquired the name which made Mr Nelson so reluctant to give it up. There were no complaints occurring after April 1893, so that the contract for the purchase of the works could in no way have affected the damage which the Southland Company suffered, and he confidently submitted that the jury could not grant them any damages in respect to that unless the theoretical ¼d damages was found against them. He would deal a little more elaborately as to the other matter, what they had to find as damages in respect to the output contract was the damages which would compensate for the loss which naturally flowed from the breach—that was, the loss which in the ordinary course of things flowed from the breach—that, he took it, was the ruling which his Honor intended to give them in this matter. It was not everything that a man suffered after a breach of contract that he was entitled to recover damages for. For instance, a man agreed to buy certain goods which were not delivered to him, but it did not follow that all the profits he would have made on those goods would be allowed as damages. The law said: No, we will give you as much money as would have enabled you to replace the goods. That was a very simple case, but here they had a more complex one, and he would ask them to look at in this way: They were sought to be charged with all the losses that the Southland Company had suffered during the years 1892-93. That was what his learned friend had invited them to do page 80 by the production of the balance sheets for those two years. He must put it to them in determining whether the output agreement was the cause of that loss, that before the output agreement was entered into the Ocean Beach Works were there. That was one thing. They could not, of course, prevent the Ocean Beach Works being there. The defendants had tried their best to stop them being erected, but in that they had failed. The works were already there. Then what was the next element which had to be considered?—the personal resources of Mr Ward himself. Now it, had been suggested that Mr Ward would have shut up his works if he had not got the output contract, but there had not been the slightest evidence to bear out that contention. Mr Ward evidently had resources to put up the Ocean Beach Freezing Works; but it was plain that the Mataura works, where they bad not to provide steam power, had cost £25,000. Mr Ward was evidently a man who had resources at his back, independently of the Nelsons. These works being there before the Nelsons came upon the scene at all, there were two factors ready to operate in competition against the Southland Company. There was the fact of these works being there ready to start—their mouths were open to receive sheep; and then there was the further fact that Mr Ward was determined to commence freezing operations. Mr Ward, evidently from the description of his character given in the correspondence, was a man of considerable enterprise; a man not easily beaten. They had in him no ordinary man who would go to sleep over his business, but a man who was exceedingly alert, active, and eager to take advantage of any opportunities that might offer. That was an element which they must take into consideration in saying what the damages should be. It had been said that if they had not taken up Mr Ward there would have been no competition. He (the learned counsel) said that the natural consequence of the erection of the works there—ready before they were even asked to take the output; the natural consequence of that, added to the fact that they had in Mr Ward a vigilant man of enterprise and resource, must have been competition. He asked them to consider which was the more likely to have happened—that these works would have been shut up, or that they would have commenced operations? Would any reasonable man say for a moment that when Mr Ward had got his works there, if Nelsons had refused to buy the output from him, from that moment the key would have been turned in the front door of the works, that they would have been shut up, and that the £20,000 or £30,000 worth would have been left idle—that Mr Ward would have said I will have nothing more to do with freezing. The suggestion is ridiculous, yet that was the suggestion made to the jury. There were the works already, and there was Mr Ward all eager for the fight, and if Nelsons had not bought the output [unclear: some] else would certainly have done so. [unclear: What] the position? Mr Nelson had told [unclear: then] before they came upon the scene the [unclear: Bluff] been a Tyser pott, they knew how [unclear: these] ping companies love each other. [unclear: Although] had recently been driven into an [unclear: embrac] cause that was the only alternative to [unclear: cu] each others' throats, he might suggest [unclear: that] ping companies did not love each [unclear: other] much. The companies were ready to [unclear: fight] when the Tyser Company had gone to the [unclear: l] the term given to it was "the [unclear: piratical] of the Tysers." Turnbull, Martin, and [unclear: Com] were turned off and were the first to [unclear: go] Could they consider it reasonable [unclear: that] would have been no shipping company [unclear: read] combine with Mr Ward in the [unclear: operation] the Ocean Beach Works? There was [unclear: also] further fact that at the time the [unclear: output] tract with Mr Ward was entered into [unclear: there] considerable excitement in the [unclear: frozen] market. That of itself was important as [unclear: ing] the jury to draw the inference that [unclear: it] not at all unlikely that the [unclear: probabilities] all the other way—that if Nelson Bros. [unclear: ha] purchased this output someone else [unclear: would] done it. Then what did the Southland [unclear: Company] itself think of this? He could [unclear: show] by one little fact the Southland Company the selves knew very well that whether Nelson bought or not someone would. Who [unclear: w] prepared for the fight? The Southland [unclear: Company], directly they heard that Ward [unclear: was] going build. What did they do? They [unclear: got] capital, they went to Mataura, and [unclear: there] took to expend £15,000 on what [unclear: afterward] £25,000. They got works at [unclear: Walla] they bought a hulk, and they [unclear: prepared] fight—they saw that they were going [unclear: to] with opposition. As soon as Ward [unclear: was] to start they knew quite well the [unclear: oppo] would commence, and they spent [unclear: their] on the supposition that that was going [unclear: to] place which naturally followed. [unclear: And] order that this moribund company—this [unclear: com] that evidently wanted to pay its [unclear: overdrad] something of that sort—might be able [unclear: to] its legs, although Nelsons had made [unclear: a] which preserved it during the year [unclear: of] prices—1892,—it now turned round [unclear: on] Nelson and said: "You must pay all the [unclear: losses] have come on subsequently." The very [unclear: co] that saved it in 1892 was now being [unclear: used] weapon with which Nelson Bros. was to [unclear: be] tised. That was the conduct of the [unclear: Southland] Freezing Company. That was the [unclear: conduct] which they came into court in order [unclear: to] damages against the defendants. [unclear: He] leave it to the jury to say whose [unclear: conduct] the better of the two. He wished to [unclear: just] their attention to the further fact [unclear: that] the period of this competition in 1892 [unclear: and] for it was only with these two years [unclear: they] concerned—there were no freezing [unclear: works] page 81 [unclear: throughout] the colony; they were all at work. [unclear: It] was not a period during which the freezing [unclear: trade] was less. It might have been a little [unclear: less] than the previous year, but not [unclear: much]; and Mr Nelson told them in [unclear: his] evidence that no works had been [unclear: undertaken] during that period throughout the [unclear: colony]. Now, he had endeavoured to make it [unclear: clear] that the competition for which they [unclear: had] claimed damages was not competition in any [unclear: way] due to the purchase of the output of Mr [unclear: Ward's] freezing works, because anybody else [unclear: night] have purchased that output, and he had [unclear: endeavoured] to show them that the probabilities [unclear: were] that somebody else would have done so, [unclear: and] that it was far more likely to be the fact [unclear: that] that would be done than that the works [unclear: would] have the key turned in their door, [unclear: and] remain idle if the Nelsons had said they [unclear: were] not going to buy the output. He must [unclear: also] put it this way: to show that the plain [unclear: tiffs] were not responsible for the competition. [unclear: They] must allow something for what might be [unclear: called] the personal element. Something for Mr [unclear: Ward's] enterprise, and something for the fact [unclear: which] had been shown in the evidence that Mr [unclear: Ward] was the head of a very large institution [unclear: that] was concerned in a large amount of trade. [unclear: If] Mr Ward, for the sake of advertising, had [unclear: chosen] to give 6d per lb for mutton, could that [unclear: have] been a breach? Of course they did not [unclear: know] the various motives that might induce [unclear: men] to do certain things. It might pay one to [unclear: buy] mutton or anything else for a time at a high [unclear: price] as an advertisement or in order to secure [unclear: a] monopoly of the trade. If that [unclear: had] been done could Nelsons be blamed for it. When [unclear: they] had bought the output Mr Ward [unclear: could] deal as he liked, and that had been shown [unclear: by] the fact that the Southland Company had [unclear: raised] its prices without consulting those to [unclear: whom] its output was sold. They had no control [unclear: over] the prices paid by the freezing companies, [unclear: and] if those companies choose to cut each other's [unclear: throats] that was their own concern. Supposing [unclear: the] Southland Company had chosen to give 6d [unclear: per] lb, were the defendants to be made [unclear: posible] for the loss they made in [unclear: consequence] of that, and because they wished to [unclear: rain] Mr Ward? The thing was ridiculous, [unclear: They] could not be charged with the [unclear: consequences] of this competitive warfare because [unclear: they had] entered into an agreement to purchase [unclear: the output] of the Ocean Beach Works. He [unclear: wished], in this connection, to refer to the annual [unclear: orts] of the Southland Company for 1892 and 1893. These reports gave the reasons for [unclear: the] sustained in the company's operations [unclear: it] was pointed out that the freezing operations [unclear: throughout] the colony had been carried on at [unclear: a other] reasons were assigned, but it had [unclear: never been] suggested that the output contract [unclear: between] the defendants and Mr Ward was the [unclear: cause] of their losses. It was attempted now to [unclear: be] suggested that Mr Ward had had a better contract, and had been better able to buy; but that had been so thoroughly answered by the evidence that he would not further refer to it. He submitted that upon the evidence as it had been given it was undoubtedly the fact that Mr Ward's contract was not so good as the contract with the Southland Frozen Meat Company. He did not think any better evidence could be adduced of what was the effect of the two contracts than that supplied in the comparative statements of the cost of mutton bought from the Southland Company and Ward respectively. They had there in parallel columns the exact quantities bought and prices paid for each, and never in any single instance did Mr Ward's price come up to that given to the Southland Frozen Meat Company. He did not know what reason Mr Ward had for competing so strongly with the Southland Company, but no doubt he wanted to extend his business, and probably considered that after two or three years he would be able to get a monopoly. That was perfectly legitimate business, and what sheep freezers throughout the colony were doing. However, it was not the defendants' affair, and was not anything for which they ought now to be made pay. His Honor would probably direct them that this was an element they would have to take into consideration in saying whether it was part of the natural consequences of the breach that these high prices were given. The learned counsel then referred to the balance sheets of the company to show the causes assigned by the company for its losses, and submitted that not one penny of the increased expenditure referred to was in consequence of the output contract, but had flowed from the intention of the Southland Company to keep out the opposition works in 1891. Then there was another important point: that although before the works in 1891 were entered upon the Southland Company had a credit balance at the bank, in 1893 they were paying £1800 per year interest on their bank overdraft? In what position was the company likely to be in even to carry on its ordinary work with an overdraft on which they were paying £1800 per annum interest? and yet it complained that its position in 1893, as compared with 1891, was due to the output contract, when they could plainly see, told by its own balance sheet, that it was the erection of the Mataura works that had handicapped it. Then Mr Cuthbertson's evidence showed that the hulk had cost them £800 in one year. There were one or two other very interesting things told by this balance sheet, showing to what really the losses of the company were attributable. While he had the balance sheet in his hand he would call their attention to the last paragraph but one of the report of 1893, which was as follows:—"As growers are aware, the company's contract with Messrs Nelson Bros, is now expired, and the firm has entered into possession of the Ocean Beach Freezing Works.

page 82

As this company has now no contract at a fixed price, we cannot as hitherto offer growers a certain price for any period of time, but we are prepared at all times to offer the very highest price for mutton that the state of the London market will permit, and our arrangements for the disposal of oar output are such as to enable us to place our clients on the very best footing and equal to any other company in the colony." There they say having no firm contract now they could not enter into any long contract, and were going to buy as best they could. In the year 1894 £20,000 from two companies were brought into the Southland Company, and what was the result of this resolution on the part of the directors to run free from any fixed contract? They lost about £29,000. That was a material point, as showing that the contract they had with Nelsons kept up their position in the competition that went on, and it was when they got free from Nelson Bros, that they lost all their money. Then he would like the jury to look at this point. The company itself was the best judge of what was the best cause of its loss, and as emphasising that fact there was an absolute silence in all the reports that were put forward until 18 months after the agreement was terminated—there was an absolute silence of any claim against Nelson Bros, on account of Ward's output. In 1893 the Southland Company was heavily indebted to the bank, and it was more likely, if there was the least possible chance of getting any money out of Nelson to put them right, they would have tried to get it if they had dreamt that the output agreement was the cause of their losses. A strong incentive existed for their taking action, and yet there was absolute silence on the matter. He concluded by stating that Mr Nelson had thought fit to fight the case right through in order that the whole thing might come before the court and show that he was an honest man.

Sir Robert Stout said that Mr Hosking had told the jury that the reason Mr Nelson had fought this case in court was really for advertising purposes.

Mr Hosking interjected that that was not so.

Sir Robert Stout maintained that that was what it amounted to. He wanted the public to say he was an honest man. The jury, however, had nothing to do with Mr Nelson's honesty. The men on the plaintiff's side were just as honest as Mr Nelson. The point was what damages the plaintiffs ought to recover from two points of view. First as to the output contract, and then as to making the contract to purchase the Ocean Beach Freezing Works. How did they arrive at this question? What was Mr Nelson looking at? Mr Nelson did not enter into the contract with Mr Ward on sentimental grounds; he thought it would pay him, and it was quite right that he should look at it from that point of view.

Mr Nelson thought there were other [unclear: works] be started; he wanted to keep his [unclear: finger] Southland sheep; he had works in the [unclear: N] Island, but he knew that the North [unclear: Is] sheep were not equal to the South Island [unclear: sh] though they were branded with Nelson's [unclear: b] he wanted to come in here and get his [unclear: sha] not the monopoly, of the Southland [unclear: sheep.] first intention was to start works at [unclear: Milton,] apparently that did not "gee." He [unclear: had] contract with the Southland [unclear: Company,] when the three years' contract was [unclear: a] expiring he met Mr Ward and [unclear: tho] "That is not a bad fellow [unclear: to] on with; I must keep Ward [unclear: on] side." Mr Nelson thought he [unclear: could] good use of Mr Ward, and a thing which [unclear: re] mended Mr Ward strongly to him was [unclear: that] (Mr Ward) was a Cabinet Minister; and [unclear: tunately] it was Mr Nelson's opinion [unclear: that] politics and management of public [unclear: busin] were such that to have a Cabinet [unclear: Minister] his arms would be an enormous [unclear: advantage] him from a business point of view. [unclear: That] the position, Mr Nelson saw that Mr [unclear: W] would be useful to him and stopped at [unclear: no] to get him with him. Mr Nelson was [unclear: look] his own interest, and if he was going [unclear: close] the wind, as he undoubtedly was, and if [unclear: he] stepped across the bounds he had to pay [unclear: fr] Let them leave all the nonsense about [unclear: sup] men, and honest men, and [unclear: honourable] That was not the point. The plaintiffs' [unclear: men] as honest and honourable men as Mr [unclear: Nel] but they did not ask for damages because [unclear: of] The jury had to come to the question as [unclear: ord] business men, to put it on a sensible [unclear: bos] footing, and to leave all bosh out of the [unclear: ques] The defendants had chosen to make a [unclear: ces] which was a breach of their [unclear: agreement] the plaintiffs, and the question was, [unclear: what] the plaintiffs suffered? Did the [unclear: jury] that all through the thing that [unclear: Nelson] were determined that the Southland [unclear: Cor] should get no advantage over Mr [unclear: Ward] they were determined to stick to Mr [unclear: Ward] prevent him from failing so that [unclear: when] had got Mr Ward in their arms they [unclear: could] do what they pleased with the Southland Company and bring them into [unclear: their] also, and Mr Nelson predicted that he [unclear: w] have both the Southland companies in [unclear: his] and that he would have the whole control [unclear: of] Southland trade; and Mr Nelson failed [unclear: been] two shipping companies came to the [unclear: assi] of the Southland Campany and [unclear: put] [unclear: money] and the shareholders came also, as Mr [unclear: N] had told them, and put £21,000 in? If [unclear: that] not happened the Nelson Bros. [unclear: (Limited)] would have succeeded in swallowing [unclear: the] of the Southland mutton. Mr Nelson [unclear: had] that stake; and it was for the jury [unclear: to] "Very well, you have played for a heavy [unclear: sta] you have got your Cabinet Minister, [unclear: and] have got the Ocean Beach Works, but [unclear: you] page 83 not got the Southland works; and having failed and broken your contract yon have to pay for it." They had to deal with Mr Nelson's honesty. Mr Nelson was not posing for his honesty, and if he had broken his contract the plaintiffs had right to damages, and the nonsense that had been talked about honour and honesty had nothing to do with the contract. If Mr Nelson had overstepped the mark he had to pay damages. Was not the output contract an immense benefit to Mr Ward and a great injury to the plaintiffs? Mr Reid, writing to the London people on the 8th October 1891, said that if Mr Ward "can get anyone to buy his meat competition will be keen; if not, he will probably be glad to sell out after working for a year or two." Mr Reid meant by that if Mr Ward attempted to work without a firm contract, how was he to finance? The getting of the firm contract from the Nelsons was of enormous advantage to him, for he was in this position—the firm contract for two years was simply financial safety for Mr Ward. He could then go to a bank and say that every sheep he bought was immediately frozen, for the Nelsons were bound to clear his works, and he could get cash-that was a financial safety for him. Was that contract most injurious to the plaintiffs? Then there was the suggestion, "Oh, some-body else might step in." Who was the somebody else? Perhaps the shipping companies? Did the shipping companies ever buy meat? The jury would have to say that with respect to the output contract the loss the plaintiffs sustained by it was considerable. According to Mr Cuthbertson they had sustained a loss of even more than the £30,000 they claimed. Take their balance sheets and see what the company was before—they went steadily to the bad under this competition,—and then see if they were not entitled to substantial damages. Then let them look at the other contract. Did they as commercial men want to say that if they had got to finance and went to a bank and said, "Here is a firm contract: our works are sold for £32,000. We have got to get payment a few months hence"—it was just the same as if Mr Ward had got a promissory note at eight months—did they mean to say that they could not go to any banker in the world and finance on that? Let them look at the enormous ad vantage it was to Mr Ward in financing to get Mr Nelson to buy the works in 1893. Why did he need to finance? Why was he anxious to sell the works at the and of 1892? It was perfectly apparent from the correspondence that he found that in 1892 his freezing works did not give him a profit any more than the Southland Company. Mr Warren's evidence showed that, for Mr Ward was getting less per lb for his sheep than the Southland Company were getting, and he was paying more. That was the evidence—it was the Evidence of Mr Nichol and Mr Cuthbertson that they always paid less than Mr Ward. His loss must have been greater than the company's, and it was no wonder that at the end of 1892 Mr Ward said he must finance. How did he do it? He went to Mr Nelson and got him to buy the works, and got a firm offer which was equal to a promissory note for £32,000. It was quite a proper thing to do—there was nothing wrong about it in the slightest degree. It was a way to finance, and it helped Mr Ward against the Southland Company; and if the jury believed that that helped Mr Ward to fight out the battle of 1893 the company were entitled to damages for that breach also. And that was the whole case. All the talk of four days had come to this point: what damages were the plaintiffs entitled to get. If he (Sir R. Stout) talked to them till the following morning he could not put it in any other way. What did the jury think the plaintiffs had lost? If they thought it was £30,000 or £20,000 or £10,000 the company were entitled to get that. It was all very well to say that the Nelsons did not mean to break the contract. It had been suggested by his learned friends that the plaintiffs should have taken the opinion of counsel for £1 or £2—that was all they appeared to be able to give in Invercargill—(laughter)—to ask if the Nelsons had broken the contract. Mr Nelson might have had an attorney in his office. At all events, Mr Nelson had done a wrong—a wrong in a business thing. All the talk about honesty and intention would have been very well in a dog-biting case, but this was a commercial case, and not a tort. The jury had to see, as business men, how much damage the plaintiffs had suffered through the Nelsons' action and he was sure they would act fairly between the parties. He would put this question to them: Had the Southland Company been injured by what Mr Nelson did? They had nothing to do with motive. Nelson's motives might be of the highest and purest character. If the plaintiffs had suffered damage through his action, it was the bounden duty of the jury on their oaths to award substantial damages; and he was sure they would admit, after hearing Mr Cuthbertson, who was not now practically connected with the company—if anything, he might have possibly had reason for soreness because he was no longer secretary or manager of the company,—there was no doubt that the company had suffered. If the jury thought the plaintiffs were entitled to damages they must give them, and all the suggestion that the action ought to have come before, and that it did not come till the bank pressed the company, had nothing to do with them—it had no right to come under their consideration at all. That was, moreover, all nonsense, because they had the evidence of Mr Cuthbertson and Mr Nichol that the directors of the company had con- page 84 sidered at an early stage whether the output agreement was a breach, and they had held over till they obtained further evidence.

Mr Bell: No, no.

His Honor: It was just discussed, I think, very soon after it was entered into, and then it was dropped.

Sir R. Stout: Why was it dropped? Because the rumour was in the air that the works belonged to the Nelsons, and he supposed that the directors wanted evidence to clinch that. Why did they believe that? Because they could not believe, if the Nelsons only were buyers of sheep, that what went on could go on. And Mr Nelson was not a mere buyer of sheep. He wanted to make a profit out of Mr Ward, and he at last landed him in his arms, and that was the reason of the contract with Mr Ward and of the increase in price. Mr Nelson had wanted to keep Mr Ward with him so that he would become in fact his partner, and he had got him, and he had now to pay for it. He (Sir R. Stout) submitted to the jury that the evidence proved conclusively that the plaintiffs were entitled to substantial damages. He had taken about one-third the time that his learned friend had occupied, and he had put to them what needed to be put, and that was: "How much money will you give us."

His Honor, addressing the jury, said: The first issue you have to determine is, fortunately, comparatively simple. The real difficulty is in the points of law which may be discussed and determined on a future occasion. For the present, and for the purpose of obtaining your opinion as to the amount of damage that the plaintiffs have suffered, I have ruled that, as a matter of law, there have been two breaches of the agreement which the plaintiffs have entered into with the defendants, one of the breaches being the output contract which the defendants made with Mr Ward in 1892, and the other being the contract to purchase the Ocean Beach Works which the defendants made with Mr Ward in 1893. I shall ask you to determine first what amount of damage the plaintiffs have sustained in respect to the first breach, and, secondly, the amount of damage sustained in respect of the second breach. The determination of these amounts of damages will be all that you are called upon to do. The contract which the plaintiffs made with the defendants was made, as you are aware, in 1891. At the time when it was made there had been a previous contract with a short time to run, and this present contract was a firm contract for the three years 1891, 1892, and 1893 that the defendants should buy the output of the plaintiffs at certain prices. A part of this contract was clause 8, which has already been before us. There is no need for me to read it again. If that clause has not been nfringed by the defendants, then there is no cause of action. If the purchase of the [unclear: out] is not an infringement of that [unclear: clause,] obviously the concessions, if any, [unclear: which] defendants made in Mr Ward's favour [unclear: are] in themselves an infringement of that [unclear: cla] Apart from that clause the bargain is: [unclear: that] an output is purchased the plaintiffs [unclear: are] put in the same position as the [unclear: purchasers,] however, the purchase of the output is [unclear: ar] infringement of the eighth clause, as [unclear: assisting] the use of Mr Ward's works, then in [unclear: coning] how far the plaintiffs' interests [unclear: have] affected by that breach you will [unclear: property] into consideration all the circumstances [unclear: of] breach, and if it be a breach of [unclear: contract,] more favourable the terms given to [unclear: Mr] of course the greater advantage it gives [unclear: to] Ward, and it might reasonably be [unclear: supp] that corresponding disadvantage to [unclear: the] tiffs a would ensue, and such [unclear: disadvantage] probably be considered a matter of [unclear: dimage] As I have said, however, for the purposes [unclear: of] present case—for the purpose of [unclear: getting] opinion of the amount of damages—I [unclear: rule] the purchase of the output is a breach [unclear: of] eighth clause of the contract, and also [unclear: that] agreement for the purchase entered [unclear: into] 1893 is also a breach. I rule that [unclear: these] breaches for the purposes of the [unclear: preset] ceedings, the only breaches of which [unclear: then] evidence. The contract was entered [unclear: into] 1891 between the plaintiffs and the [unclear: defend] for the purchase of plaintiffs' [unclear: meat] defendants. At that time the company [unclear: was] a good position. In 1891, however, [unclear: there] opposition threatened by Mr Ward, [unclear: and] plaintiffs, in conjunction with the [unclear: defendent] did their best to stop Mr Ward from [unclear: star] opposition works. Messrs Nelson had [unclear: a] at Mataura, and they were anxious [unclear: that] plaintiffs should acquire that site [unclear: and] works for the purpose of preventing [unclear: comtion,] the Mataura site being a specially [unclear: favourable] one for freezing purposes on [unclear: account] the water power. Messrs Nelson had [unclear: acq] that site and handed over their right [unclear: in] the plaintiff company, and the plaintiff [unclear: company] started freezing works there, [unclear: which] ultimately completed. In the end [unclear: of] however, all parties were satisfied [unclear: that] Ward's works would be really erected [unclear: at] Ocean Beach, and that it was really [unclear: not] on Mr Ward's part. The defendants, [unclear: see] was hopeless to prevent Mr Ward starting [unclear: in] beginning of 1892, entered into the [unclear: arrment] complained of—that they should [unclear: pur] Mr Ward's output. As I have said, the [unclear: pur] of the output was a breach of the [unclear: con] You have to consider what damages the [unclear: p] tiffs are entitled to recover in respect [unclear: of] breach. The damages must be such as, [unclear: in] opinion, naturally flow from the [unclear: bcea] damages that plaintiffs would not [unclear: have] if Messrs Nelson had not entered [unclear: into] arrangement with Mr Ward. It is [unclear: con] page 85 on behalf of defendants that if Messrs Nelson had not purchased Mr Ward's output, somebody else would; or, at any rate, that it would be unreasonable to expect that Mr Ward, having gone to very great expense in building the works, would simply, when they were competed, lock the doors and not start working. Obviously, however, it was not in the contemplation of the plaintiffs that there would not be competition by Mr Ward irrespective of any possible arrangement which Nelsons might enter into, It the plaintiffs had not thought that there would be competition between Mr Ward and themselves after the works were erected, the plaintiffs would have had no object in using the exertions they did to anticipate Mr Ward. What everybody anticipated in 1891 before there was any probability of any arrangement between Messrs Nelson and Ward was that the natural result of Mr Ward's action would be competition, and that there would be a battle between the Southland Company and that gentleman, and they girded up their loins accordingly. That circumstance—if your opinion goes in the direction I have indicated—that there probably would be competition in any case, arrangement or no arrangement between Ward ana Nelson,—of course would property be taken into consideration in estimating what damages the plaintiffs are entitled to recover. The plaintiffs are not entitled to recover damages from Mr Ward's competition because Messrs Nelson had no part in starting the buildings and putting Mr Ward in a position which enabled him to compete, but they are sotitled to damages in respect of injury which is done to them by the aid Messrs Nelson gave to Ward in that competition by reason of entering into the output contract, and it is for you to determine what, in your estimation, the amount of such injury is. The financial position of the company in 1891. was this: that there was a net balance of £1248. That represented the net profits for the year 1891. Mr Cuthbertson made a somewhat different statement. On examination of the balance sheet—which of course shows everything—it is perfectly clear that if my figures are correct there was at the beginning of the year to the credit of profit and loss account £2571, and carried forward at the end of the year £3769. But during the year 1891 there was an amount allowed tor depreciation on machinery and buildings of £1500, which is of course not part of the net profit; and there was also a bonus of £1500 to shippers, and that of course is not part of net profits. Next year the bonus does not appear in the balance sheet, but, in fact it was given in a different form. So in considering the amounts of 1892 the fact of there being no bonus to shippers is immaterial. What we have in 1891 is that there was a net profit of £1248, and that during that year £1500 was allowed for depreciation. In the year ending 31st December 1892—and it is during this year that the first loss with respect to which the plaintiffs' claim accrued—there was neither profit nor loss—things were exactly square. The sum of £722 was allowed for depreciation on machinery and buildings, and it is of course to be assumed that that sum was a sufficient sum. I don't think there is anything to show it was not sufficient sum for depreciation, so that we have in 1892 neither profit nor loss, but the net results of the year were £1248 worse than they were in 1891. Then in 1893 we find that it was all loss—that there was a sum of £5955 lost, and during that year there was nothing allowed for depreciation on buildings and plant, though I suppose it must be assumed that something should have been allowed for depreciation. That, therefore, is the loss which the plaintiffs sustained in their operations during those two years. They also say this: that there is a further contingent loss during these two years because of this cause. In the beginning of 1893 the Mataura Freezing Works were in full operation, and they say that if they had been able to compete in the purchase of sheep that they would have been able to make lull use of these works—that they were in a position, so far as freezing was concerned, to start and freeze 1100 sheep per day, and were in a much better position to carry on that business than in 1891, but they were unable to do so. As I have said, however, the loss, which actually appears from the balance sheet—the loss that appears from the balance sheet in 1892 is merely a loss of profit, but in 1893 a loss of £5955, and nothing written down for depreciation. The plaintiffs claim that they are entitled at any rate to the whole of the losses as shown by the balance sheet to have occurred in those two years. Mr Cuthbertson estimates that the loss from that cause is £30,000 during those years. It is difficult to see how that comes. In 1894, after £20,000 had been put in by the shipping companies, there was a loss of £16,500. With that, however, we have nothing to do. No part of that loss can be considered as resulting from any possibly suggested breach of contract on the part of the defendants. I have given you, then, the position of the company as shown by the balance sheets for the years 1892 and 1893, when it is suggested losses were made through the action of the defendants, and it is for you to say whether any, and if so what amount, of these losses, were caused by such action. His Honor then proceeded to add that he need hardly say that the fact that the company during these two years had lost money was no reason why the defendants should be called upon to pay, even although they had broken their contract, till it could be shown that the losses, or part of them, followed entirely from the wrongful act of the defendants. They had the reports and balance sheets before them, and the report of 1892, which was the first unsatisfactory one, gave the number of sheep that page 86 were frozen in 1891 and 1892, and those figures showed a falling off in volume of business transacted "by the excess competition of a private firm." The report of the year 1892. however, showed no surplus after writing £722 off for depreciation of buildings, and they said when the entire works were completed they would be able to freeze at a lower rate than any similar concern in New Zealand. But the cost of the buildings proved greater than was supposed. After further referring to the balance sheets of the Southland Company, his Honor said it would be seen in the report for 1893 the circumstance that Messrs Nelson Bros had taken the whole of the Ocean Beach output was mentioned, and no objection was taken to that course being pursued. As he had said, however, as a matter of law the fact that the output contract was a breach of contract in the first instance, and the plaintiffs became aware of the Ocean Beach contract and did not object to it, was not in law an answer to a claim by the plaintiff for damages accruing from such a breach of contract. There was this, however, to be said, that if the plaintiffs were aware that the terms of the contract were not being complied with, and if they did not complain, it might be matter for consideration whether the damage which they now complained of really did result from the suggested breach of contract. Of course it was obvious that they were aware from the middle of 1892 at any rate of the existence of the output contract, and they never remonstrated with Messrs Nelson or complained that Messrs Nelson were injuring them by the fact of carrying out the output contract. In fact it was rather the contrary, because they complained, not that Messrs Nelson were carrying out the output contract in respect to Mr Ward, bub that Messrs Nelson were giving Mr Ward concessions which he ought not to have got They therefore seemed to have acted on the assumption that so far as the output contract was concerned, if it was a breach of contract, Messrs Nelson were not doing them any harm. However, what the jury had to consider in estimating damages was not that circumstance only, but they had to take the whole circumstances into consideration. As to the concessions to Mr Ward, his Honor said that the circumstance that the concessions were made, if it had the effect of placing Mr Ward in a better position, would be an element in considering the damage that the plaintiffs suffered. It might, therefore, be material to consider whether Mr Ward really had an advantage which the plaintiffs had not. What object Mr Nelson had in making the concessions it seemed immaterial to inquire. The only thing it was material to inquire was whether the concessions [unclear: pla] the plaintiffs at a great disadvantage. [unclear: Go] on to speak of the arrangements entered [unclear: in] on May 1, 1893, by which Nelson Bros. [unclear: were] 1st January 1894 to purchase the Ocean [unclear: B] Freezing Works for £32,000, his [unclear: Honor] it was difficult to say how that was not [unclear: tech] cally a breach of the contract with the [unclear: Southland] Company. It was for the jury to [unclear: say] far damages might be attributable to [unclear: this] tract having been entered into. Of [unclear: course] effect of the contract was to place Mr [unclear: Ward] a satisfactory financial position, at any [unclear: rate] far as the works were concerned, [unclear: because] Ward was very much in the same [unclear: position] there had been a bill of eight months [unclear: given] him for £16,000.

Mr Bell asked if it was to be assumed [unclear: that] Ward was in an unsatisfactory position?

His Honor went on to say that he [unclear: sho] direct the jury to take into [unclear: consideration] fact that the accommodation Mr Ward [unclear: got] to place him in funds. He did this [unclear: simply] cause if any damages could be [unclear: suggested] the breach of contract it was by reason of [unclear: th] His own opinion rather was that, [unclear: although] agreement was a breach of the contract, [unclear: yet] was simply because of that part of the [unclear: con] which related to the erection of [unclear: building] freezing works during the prohibited [unclear: period] going concern. However, for the [unclear: purpose] direction he should interpret the breach [unclear: in] same way as Sir Robert Stout [unclear: suggested-] the effect of it was to strengthen Mr [unclear: Ward] position.

His Honor then submitted the [unclear: follow] issues to the jury:—(1) What damages [unclear: are] plaintiffs entitled to recover in respect [unclear: to] breach of contract by the defendants in [unclear: ecing] into the output arrangement [unclear: with] Ward? (2) What damages are the [unclear: plai] entitled to recover in respect to the [unclear: agreement] of May 1893 to purchase the Ocean [unclear: B] Freezing Works?

The jury retired at 8.38 and [unclear: retur] to court at 10.7 with a verdict [unclear: of] on each issue. Costs were fixed as per [unclear: sa] with allowance for second counsel [unclear: and] days' disbursements, and witnesses' [unclear: expen] interlocutory costs to be settled in [unclear: Cham] Execution to be stayed until the [unclear: terminat] the Court of Appeal.

By consent Mr Bell moved for a [unclear: nonsuit] new trial on the grounds of [unclear: misdirection] non-direction, and to reduce damages.

It was arranged by consent that the [unclear: mo] should be removed to the Court of Appeal.

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